PSD2: an “open, digital payments market in Europe”

On 13th January 2018, the new “European Directive on Payment Services in the Internal Market” (PSD2) comes into application. Commenting in Trade and Forfaiting Review, Shahrokh Moinian, Deutsche Bank’s Global Head of Cash Management Corporates, emphasises the significance of this regulatory change.

PSD2’s predecessor regulation – PSD1 – was introduced in 2007 to a very different kind of payments market. Since then, a step-change in technological development has thrown up a multitude of new payment methods, channels, and operators not captured by PSD1 – especially in the areas of internet payments and online account services. Moreover, as online and remote payments have become more ubiquitous – so too has online and remote payment fraud. In fact, the latest pan-European figures from the European Banking Authority (EBA) show a 21.2% increase in online card payment fraud in the EU year-on-year1.

PSD2 takes account of the changes that have occurred since 2007; it licenses and regulates new market players (or Third Party Providers as the directive refers to them); strengthens customer authentication requirements for online, remote and electronic payments; and widens the geographical and currency-scope of existing regulations.

However, PSD2 is likely to be far more than a mere regulatory update. Writing in TFR, Deutsche Bank’s Shahrokh Moinian explains how PSD2 could foster further change in the payment space – acting as a catalyst for a “new, more open, digital payments market in Europe”.

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